Marketing Principles: McDonald's Analysis

This report provides a comprehensive analysis of marketing principles in the context of McDonald's. It covers various aspects of the marketing process, including identifying marketing opportunities, selecting target markets, and developing marketing strategies. The report also evaluates the benefits and costs of marketing orientation, examines the impact of macro and micro factors, and proposes segmentation criteria for different markets. Furthermore, it discusses targeting strategies, buyer behavior, and positioning strategies used by McDonald's. The report also delves into product development, distribution systems, pricing strategies, promotional policies, and additional elements of the extended marketing mix. Finally, it analyzes the marketing mix for different segments and distinguishes between B2B and B2C marketing, as well as domestic and international marketing.

MARKETING
PRINCIPLES
1

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Different elements of marketing process in the context of Mc Donald's ..............................3
1.2 Explaining the different benefits and cost of marketing orientation to company .................4
TASK 2............................................................................................................................................5
2.1 The various macro and micro factors that can impact the different functions of company . 5
2.2 Proposing segmentation criteria for Mc Donald's in various markets ..................................6
2.3 Targeting strategy for new healthy range of products by Mc Donald's ................................8
2.4 Impact of buyer behaviour on marketing activities of Mc Donald's ....................................8
2.5 Positioning strategy used by company ..................................................................................9
TASK 3............................................................................................................................................9
3.1 Developing products to sustain competitive advantages.......................................................9
3.2 Distribution system used by company ................................................................................10
3.3 Determining the prices for new products of company ........................................................10
3.4 Promotional policy for company.........................................................................................11
3.5 Additional elements of extended marketing mix of Mc Donald's ......................................12
TASK 4..........................................................................................................................................12
4.1 Marketing mix for two selected segments for Mc Donald's ..............................................12
4.2 Distinction between marketing to business rather than consumers.....................................14
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................16
2

Index of Tables
Table 1: Different segmentation criteria .........................................................................................8
3

INTRODUCTION
Marketing is a managerial process that aims at offering the goods and services needed by
customers by identifying their demands, preferences and taste. It further refers to a set of actions
of business that intents to provide right product, at right location, at perfect time and at
appropriate price (Jobber and Ellis-Chadwick, 2012). Thereafter, marketing principles refers to
blend of four marketing components including product, price, place and promotion. The key
purpose of marketing is to determine the marketing possibilities and use them to enhance the
business revenue and growth prospects. Therefore, marketing activities enable an organization to
make the best use of its resources.
In this report, various aspects of marketing principles will be studied in the context of Mc
Donald's. It is a leading fast food chain that is specialized in offering hamburgers, french fries,
desserts, chicken etc. Company is offering its superior quality services in 119 nations across
more than 36000 outlets. In this report, benefits and costs of marketing orientation to Mc
Donald's will be evaluated. Along with this, the impact of macro and micro factors on the
marketing decisions of cited company will be described.
TASK 1
1.1 Different elements of marketing process in the context of Mc Donald's
Mc Donald's uses its marketing process for brand building by identifying the needs of
consumers and making viable changes in its offerings. With this aspect, company aims at
creating distinct image of brand in the market (Sheth and Sisodia, 2015). Further, business entity
focuses on various elements of marketing procedure which assist in getting success in the present
dynamic market. They are:
 Identifying the marketing possibilities: It is a key process which assists brand in
determining the marketing opportunities that cater the needs of consumers and enhance
the image of Mc Donald's in the market. In this respect, increasing health concern has
influenced company to offer healthy items like, salads, smoothies, apple pie, seasoned
fries, fish wraps etc (Nwankwo and Gbadamosi, 2010).
4

 Selecting the target market: Marketing process involves the selection of right market
with maximum opportunities for offering wide range of products and services. Therefore,
company can chose to offer its healthy products to young health conscious individuals.
 Strategy: It refers to clear actions that assist business enterprise in attaining the long term
goals of organization (Henley, Raffin and Caemmerer, 2011). Strategy provides overall
direction to the merchandising efforts of company that also determines its future success.
Along with this, strategy is designed by Mc Donald's after considering its vision, mission,
objectives etc.
 Planning: It refers to well defined consecutive steps that help in accomplishing the set
goals of company by employing the designed strategy. It involves the process of
determining the availability of resources, fiscal planning, preparing budgets etc.
 Tactics: They are short term plans aimed at attaining the short duration objectives of
company (Rudd and Mills, 2011). Tactics assist in encouraging the sales of Mc Donald's
with the help of promotional offers, discounts etc.
1.2 Explaining the different benefits and cost of marketing orientation to company
Marketing orientation is a viable approach used by company to offer products and
services that are configured as per the desires, requirements and preferences of customers along
with ensuring the functionality of product as well as quality of offering. The main aim of
marketing orientation program of Mc Donald's is to build its brand image by recognizing and
responding to the needs of customers (Block and et.al., 2011). The main benefit of this approach
is in terms of brand recognition, customer loyalty and higher retention in the market. Sound
marketing orientation helps company in off beating its rivals. Hence, significant amount is
invested by Mc Donald's in its marketing orientation program. Different costs and benefits
involved in this program are explained as follows:
Benefits:
Higher level of Branding: Marketing orientation program assists company in making
continuous changes in its services that further develops a unique image of Mc Donald's in the
market. With this respect, it is able to attain a superior level of branding and stand ahead of its
rivals (Lovelock, Patterson and Wirtz, 2014).
5

Innovative company: Being marketing orientated enables brand to make innovation in
its products and services to cater the needs of consumers in the best manner. This further helps in
developing new products and attaining competitive advantage in the market.
Costs:
Research cost: Mc Donald's is required to invest significant amount in market research in
order to identify the unsatisfied and emerging needs of customers (Grier and Kumanyika, 2010).
Therefore, investment is done in market intelligence to respond accurately to emerging demand.
Constant investment: Marketing orientated company requires continual up-gradations in
work processes. In this respect, company is required to invest significant amount in ongoing
training for employees, new techniques and equipment, product iterations etc (Marketing
orientation. 2015).
Hence, marketing orientation program takes into account both the benefits and costs which
must be considered by company. Mc Donald's should ensure the cost of orientation should not
be more than its advantages.
TASK 2
2.1 The various macro and micro factors that can impact the different functions of company
Following are the different internal and external variables existent in business
environment that further affect the performance of company. These are explained as follows:
Micro environmental factors:
 Consumers: They are the lifeblood for company as they use the services offered by
business and generate profit in return. Therefore, it is important for Mc Donald's to
ensure high level satisfaction among customers in order to ensure their loyalty and
retention with them (Giovannucci, Barham, and Pirog, 2010). Hence, Mc Donald's offers
innovative products, value for the money paid by customers, new offerings, hygienic
surroundings etc.
 Competitors: Actions of rivals have direct effect on the sales and profitability of
company. Therefore, their strategies must be considered by Mc Donald's to keep in line
with them. Government: Rules and regulations framed by UK and government of host countries
have direct impact on the functioning of company. For instance, violation in government
6

policy like, competition or anti-discrimination can result into legal consequences which
can develop negative brand image (Arab and et.al., 2012).
Macro environmental factors:
 Political factors: To function smoothly, it is important for Mc Donald's to consider the
needs of political parties like, employment to local citizens, timely payment of tax,
protection of environment etc. This will help company in avoiding legal actions, penalty
etc.
 Economic factors: Changing economic trends like, GDP, GNP, disposable income,
interest rate, employment rate have direct impact on the performance and success of
company (Varadarajan, 2010). For instance, fall in disposable income of country can
reduce the purchasing capacity of buyers; therefore they may prefer eating at home rather
than in restaurant. This in turn, sales of company may drop.
 Technical factors: In order to remain competitive, it is important for Mc Donald's to use
new technology and processes as well as upgrade its techniques through continuous
research and development (O'shaughnessy, 2014). However, failure to adopt new
technology can lead to dissatisfaction among customers.
2.2 Proposing segmentation criteria for Mc Donald's in various markets
Marketing segmentation is a business approach that enable Mc Donald's in dividing the
total market in small sets of customers, business or nations having similar needs, preference and
requirements. Segmentation will help business in targeting the customers of UK as well as in
different parts of the world (González-Hernández and Orozco-Gómez, 2012). Further,
segmentation criteria which can be considered by Mc Donald's can be as follows:
IDENTIFIABLE The distinct features of the target segment
should be measurable so that it can be
recognized easily.
ACCESSIBLE The potential segment should be capable of
reaching through effective marketing and
distribution channels (Fuchs and
Diamantopoulos, 2012).
7

SIZEABLE The target market should be have large size so
that it justify the efforts, resources used by
company to target them.
PROFITABLE The size of segment is of no use if its not
profitable. Therefore, it must have growth and
profit building opportunities (Block and et.al.,
2011).
Table 1: Different segmentation criteria
On the basis of aforementioned segmentation criteria marketers of company can select
following segments for offering new healthy products introduced by Mc Donalds.
 Geographic: As per this aspect, the market is divided on the basis of geographical
locations. Therefore, company can provide its services in various regions like, developed
and developing countries. Like, for targeting Asian regions, company can provide more
vegetarian products like, vegetable hamburgers, fruit salads, egg less deserts. Further, it
should avoid pork, beef meat etc. as consuming them is against custom of society.
However, for England market, Mc Donald's can continue with Chicken burger, fish
products etc (Varadarajan, 2010).
 Demographic: The marketers of company can divide the market on the basis of age,
income, education and gender etc. For example, organization can offer its healthy range
of food products to individual of age 20-30 who are more concerned towards health and
physique. Thereafter, for elderly customers from age 50-65 company can offer organic
food with effective home delivery services.
2.3 Targeting strategy for new healthy range of products by Mc Donald's
Targeting strategy assist company in identifying its target consumers and determining to
whom they want to offer its healthy food items. For this aspect, marketers of brand can select
following strategy that assist company in best way:
Strategies Description
8

Differentiated It enable company to use different and unique
marketing tools for contrasting segments
selected by Mc Donald's
Undifferentiated It is effective procedure that assist brand in
reaching the entire market employing the same
marketing and promotional methods (Yu,
Chen and Kwok, 2011).
Concentrated With this strategy, company can concentrate on
small segment with less consumers but having
ample amount of marketing opportunities
Table 2: Targeting strategies
On the basis of above targeting strategies, Mc Donald's can select differentiated strategy
that help in reaching various consumers with different marketing preference (Zhang and et.al.,).
Therefore, to reach young and dynamic customers new technology like, M marketing, engine
optimization, social media advertising can be used. For targeting the customers of specific
geographic location, ads in local Tv channels, newspapers, movie theatres, hoardings can be
used.
2.4 Impact of buyer behaviour on marketing activities of Mc Donald's
Buyer behaviour regards to organized process used by customer while making purchase
decisions. It also determine those factors that encourage customer to buy the products and
services of specific brand over other rivals. On the basis of buyer behaviour effective marketing
strategies can be designed or significant modification are done in present one by company.
Therefore, by understanding the buyer behaviour, marketer of Mc Donald's can reach the
customers of target, demographic and geographic segment. The price of product and income of
buyer can be taken as criteria for stimulating the behaviour of buyers within demographic
segmentation in the favour of brand (Block and et.al., 2011). Therefore, for price conscious
consumers, company can use attractive marketing activities like, economic meal for 99 only,
discount coupons etc .However, for status conscious customers, high priced products can be
offered by brand like, premium meal, Burger King etc Further, the products can be linked with
9

the status symbol in promotional campaigns to encourage the high income customers to make
purchase. Likewise, marketing activities for reaching the customers of specific location,
company can use marketing at local level. For instance, ads in local newspapers, customized
menu and adding local taste and flavours.
2.5 Positioning strategy used by company
Following positioning strategy can be used by Mc Donald's to build a unique and
differential image in market as compared to its rivals. For this aspect, following positioning
strategy can be adopted by company.
 Price positioning: Company can offer premium products at low price for encouraging
sales of its products. Therefore, Mc Donald's can use price as tool to attract customers.
Hence, discount, food coupons, offers like, Mc burger 20% large, buy one meal get small
French fries free etc. However, for developing premium image in status concious
customers, brand image can be used as tool. Therefore, high priced products like, Mc
Chicken, filet-o-fish, Burger King etc can be used by company (Lee and Hwang, 2011).
 Benefit positioning: To encourage the sales, brand can highlight the attractive features
provided only by Mc Donald's. For instance, mobile applications can be developed by
brand to inform customers about new offerings, offers etc. Thereafter, organic food items
can be introduced by brand in its menu for attracting customers.
TASK 3
3.1 Developing products to sustain competitive advantages
Competitive advantage means those privileges available to Mc Donald's which help it in
performing better than its rivals. They further help brand in outperforming than its competitors
such as, Burger King, Starbucks, Subway etc . Therefore, to hold back the competitive benefits
company ensure it modify its services and products according to the needs of prospective
customers. Therefore, Mc Donald's can use new techniques and processes for developing
competitive advantages. The research and development will assist organization in identifying
new core competencies (Lovelock, Patterson and Wirtz, 2014). . At present, Mc Donald's have
competitive advantage in terms of upgraded technology, fast services etc. In this respect,
company use standardized processes and equipments for cooking the food at proper temperature
and serving it hot within 1-2 minutes only. However, such fast services are offered only by Mc
10

Donald's as compared to its rivals. Further, it takes effective care of emerging needs of customers
like, it have started offering home delivery, organic food, healthy products like, garden salads,
seasonal fries etc.
3.2 Distribution system used by company
Distribution system can be refereed as ordered process, systems and functions that are
planned to assist and supervise the flow of products and services from producer to seller. The
success of company depends upon the distribution system to a large extent as it help in reaching
the potential consumer effectively. With this respect, Emac digital distribution system is a
technique used by Mc Donald's to administer its supply process. Thereafter, company provide 24
hours services in most favourable locations like, railway stations, airports etc. The organization
is offering its services through 36000 outlets that are developed mostly at prime locations of city
like, near colleges or school, tourist destinations etc (Lee and Hwang, 2011). Therefore,
products and services can be easily availed by buyers within their comfort zone. Thereafter, to
market its day and night services, Mc Donald's utilize after-hours radio and TV marketing.
Further, for reaching young customers, franchise are opened in shopping malls, college canteens
etc. However, for attracting the aged customers home delivery services are provided at nominal
charges. In order to fit the criteria within geographic segment, Mc Donald's is opening new
restaurant in different convenient locations. With this aspect, company aims at ensuring the
satisfaction and convenience among it brand loving customers by using its effective and well
integrated distribution network (Sheth and Sisodia, 2015).
3.3 Determining the prices for new products of company
The price of product plays an important role in determining the success of brand. The
company can use pricing strategy for reaching different customers. Mc Donald's ensure it
provide its customers value for the money paid by them. Therefore, high quality services are
provided by brand at affordable prices. This further help in retaining the consumers in long run.
Further, price also have psychological link like, Mc Donald's keep price of its hamburgers like
$1.99 instead of 2 so that it looks less costly to price concerned customers. However, the low
prices can induce customers to doubt on the quality of product (Lovelock, Patterson and Wirtz,
2014). . Hence, to sustain its brand image, it is significant for company to adopt proper prices for
11

its products and services. In this respect, following pricing strategy can be selected by Mc
Donald's for its wide range of offerings.
Pricing strategy Description
Skimming Mc Donald's can determine high prices for new offerings
and reduce it after some time.
Competition Company can set prices after considering the pricing
strategy of its competitors in order to main the market
position in present competitive market.
Psychological Mc Donald's can use such prices that have psychological
affect like keeping prices lower than a round figure.
Example, french fries for $1.79 instead of $1.80 (Mc
Donald's menu. 2015).
Premium In order to reflect the superior worth of the brand among
high end customers, premium or high prices can be kept by
company.
Table 3: Types of Pricing strategy
For the new healthy range of food items, Mc Donald's can use premium pricing which
will also help brand in improving its profit margins and showcasing the exclusiveness of new
offerings.
3.4 Promotional policy for company
With the help of promotional policy, Mc Donald's can communicate the worth of its
products and services to the potential buyers. It will also help company in spreading awareness
among customers about new offerings. The promotional policy play am important role in
encouraging the consumers to purchase the products. For this aspect, integrated promotional
policy is used by brand to attract new consumers (Fuchs and Diamantopoulos, 2012). . It further
enable Mc Donald's to use both modern and traditional promotional tools to boost its sales.
Therefore, to attract elderly customers, of age 45-65 company can use advertisement in
television, newspapers, radio etc. Further, for encouraging the purchase from customer of age
12